- Semester:III
- Credits: 4
Preamble
This elective course, to be offered in the third semester, which requires a good understanding of Microeconomics. The course aims at providing a theoretical exposition of bases, effects and the restrictions on free flow of international trade with the empirical evidence.
Module 1: Classical Trade Theory (10 Lectures)
Absolute and Comparative Advantage of Trade; Real and Opportunity Cost Approaches; Gains from Trade, Reciprocal Demand and Offer Curves; Terms of Trade. Revealed Comparative Advantage.
Module 2: Neo-Classical Trade Theory (14 Lectures)
The Heckscher-Ohlin (H-O) Theory; Factor Price Equalization Theorem and Generalization to n Factors and Goods; Leontief Paradox, Rybczynski Theorem; Trade and Growth.
Module 3: Modern Trade Theory (12 Lectures)
Concept of Intra-industry Trade, Imperfect Competition and Trade- The Neo-Heckscher-Ohlin Models- Favley Model, Neo-Chamberlinian Models- Krugman Model, Oligopolistic Models- Brander-Krugman Model, Reciprocal Dumping Model- Ice-berg Model. Gravity Equation. Empirical work in Intra-industry Trade-Balassa Index, Grubel-Lloyd Index, Acquino Index. Trade in Services.
Module 4: Trade Policy (12 Lectures)
Instruments of Trade Policy; Tariffs and Welfare, Optimum Tariff, Tariff and Real Rewards to Factors of Production. The Stolper-Samuelson Theorem. The Metzler’s Paradox, Theory of Customs Union, Quotas and Export Subsidies. Gains from Trade and Regional Agreements.
References
1. |
Feenstra Robert C. (2004), Advanced International Trade- Theory and Evidence, Princeton University |
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Press, Princeton. Chapters: 1, 2, 3, 5, 6, 7, 8 and 10) (Modules 2, 3 and 4). |
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2. |
Grimwade Nigel (2001), International Trade, (Second Edition), Routledge, London. Chapters: 3, 8, 9 and |
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10, (Modules 3 and 4). |
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3. |
Grubel H. G. and Lloyd P. J. (1975), Intra-industry Trade, Macmillan, London. (Module 3). |
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4. |
Haberler G. (1961), A Survey of International Trade Theory, International Finance Section, Department of |
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Economics, Princeton University. (Module 1). |
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5. |
Krugman P. R. and Obstfeld M. (2000), International Economics-Theory and Policy, Addison-Wesley, |
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Delhi. Chapters: 4, 5, 6, 8, 10, and 11. (Modules 2 and 3). |
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6. |
Salvatore Dominick (2002), International Economics, John Wiley and Sons, Singapore. Chapters: 2, 3, 4, |
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7, 8, 9, 10, and 11. (Modules 1, 2, 3 and 4). |
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7. |
Sodersten Bo and Reed Geoffrey (1994), International Economics, Macmillan, London. Chapters: 3, 6, 7, |
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8, 10, 11, and 16 to 23. (Modules 2, 3 and 4). |
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M.A. Credit Course 
